Total and Permanent Disability insurance

Total and Permanent Disability (TPD) cover pays a benefit if the insured person becomes totally and permanently disabled and is unable to work again. It may assist with medical and rehabilitation costs, and provide a level of financial security for your client’s family.

Who can benefit from this type of cover?

This type of insurance may assist someone who wants to help ensure their financial security in the event they become totally and permanently disabled, either through sickness or injury. If the insured person has a family that relies on their income, a TPD Benefit can help reduce the likelihood of the family suffering financial stress. The benefit can be used for:

Repayment of debts such as mortgages, loans or credit cards

Rehabilitation and medical expenses

Home modification costs

Financial support to make necessary lifestyle adjustments

Protection of a business in the event that a key person permanently exits the business, due to total and permanent disablement

What are the options under this type of cover?

PD cover is available as a standalone policy and as an additional benefit linked to Term Life. BT offers four types of TPD cover, referred to as TPD definitions. Each TPD definition offers cover for a different purpose. Set out below is a summary of the different TPD definitions if a policy is held outside superannuation. Please refer to the PDS for a full explanation of the different definitions including those that are applicable to policies held inside superannuation.

Own occupation TPD: sickness or injury which has prevented the insured person from working in their own occupation for at least 3 consecutive months and due to which they are unlikely to work again in their own occupation.

Any occupation TPD: the sickness or injury has prevented the insured person from working in their own occupation for at least 3 consecutive months and either:

due to which they are unlikely to work in any occupation for which they are reasonably qualified because of education, training or experience; or

if the insured person is able to work in any occupation for which they are reasonably qualified because of education, training or experience but the total remuneration for their occupation is less than 25% of the insured person's earnings in their last 12 months of work.

Home duties TPD: sickness or injury which has prevented the insured person from carrying out all normal household duties for at least 3 consecutive months and due to which they are unlikely to carry out normal household duties again.

General cover TPD: the insured person has suffered either total and permanent loss of use of two limbs, loss of use of one limb and loss of sight in one eye or loss of sight, or a Loss of Independent Existence (as defined in the Medical Glossary in the PDS.

What are some of the benefits included in this type of insurance?

TPD Death Benefit: Pays a $10,000 benefit if the insured person dies and the TPD Benefit has not been paid.^

Future Insurability Benefit: Allows the insured person to increase the TPD Benefit sum insured, on the occurrence of one of the specified personal or business events - without further medical evidence.

Financial Planning Benefit: Reimbursement up to a value of $5,000 for the preparation of a financial plan following the payment of a TPD Benefit. This benefit is paid once for each insured person.

Counselling Benefit: Reimbursement up to a value of $5,000 for a maximum of 10 counselling sessions, following the payment of a TPD Benefit. This benefit is paid once for each insured person.

TPD Continuation Option: An insured person may be able to continue their TPD benefit on an any occupation TPD definition after the insured person’s 65th birthday, subject to entry requirements and work arrangements.

TPD Partial Benefit*: Pays a partial benefit if the insuranced person is partially and permanently disabled.

^Stand alone cover only.

*Payment of this benefit will reduce the amount of the TPD Benefit or Partial TPD Benefit should they become payable subsequently while the policy is in force.

What are optional add-on benefits under this type of cover?

You can apply for optional benefits. Unless we have stated otherwise, the optional benefits have an additional cost. Optional benefits include:

Super Plus TPD Benefit: When Flexible Linking Plus is selected to split own occupation TPD inside and outside superannuation, the Super Plus TPD Benefit is the portion of own occupation TPD cover which is held under the Flexible Linking Plus policy outside superannuation.

Business Cover Benefit: This benefit is available for policies taken out for business purposes and allows the insured person to increase their cover if a specified event occurs, to help match the growth of the business without the need for additional medical underwriting.

TPD Buy Back Benefit: Allows the insured person to reinstate the Death Benefit 14 days after the insured person becomes totally and permanently disabled, by the amount of the TPD Benefit that was paid.

Double TPD Benefit*: Allows your client to reinstate the Death Benefit after the insured person becomes totally and permanently disabled, by the amount of the TPD Benefit that was paid. In addition, premiums payable on the reinstated amount of the Death Benefit will be waived for the life of the policy.

Waiver of Live Premium Benefit: Waives all premiums payable on the policy if the insured person has been totally and temporarily disabled for at least six consecutive months. Premiums are waived for as long as the insured person remains totally and temporarily disabled.

* Note available if Multi-link Benefit is selected.

What are some of the ways this type of insurance may be structured and what are some of the tax benefits of how it is structured?

TPD Insurance can be held inside or outside of superannuation, with the exception of own occupation TPD, which cannot be held inside superannuation. When held outside superannuation, the policy owners can be the insured person, another individual, a trust, or a business entity. BT allows up to five owners on policies held outside of superannuation. Each policy owner jointly owns the policy. When held within superannuation, the policy is owned by the fund’s trustee and can be through a Mastertrust or Platform Super.

Premiums are not generally tax deductible for TPD Insurance outside superannuation, but it will depend on the specific circumstances of the policy taken out, such as whether it’s for a business. Any received benefits will generally not be treated as assessable income for tax purposes if received outside superannuation by the individual who is insured. Benefits are also generally exempt from Capital Gains Tax (CGT) if received by the insured person or a defined relative.

BT Protection Plans

All BT Protection Plans provide the following features, to ensure that your client is receiving the most value out of their policy:

CPI increases;

Guaranteed renewable provided premiums are paid when due;

Guaranteed upgrades automatically, provided the upgrade does not result in an increase in premium. Loadings, exclusions or special conditions will continue to apply;

Loyalty benefit after a policy has been held for 3 years;

Multi-Policy discount on the premium applicable to the insured person;

Wrap and Platform Super discount on premiums when benefit premiums are paid through a Wrap or Platform Super account;

Premium Holiday if a policy has been in force and premiums paid for 6 months, we will allow the insured person to suspend their policy for up to 12 months in certain circumstances of financial hardship; and

The information shown on this site is general information only, it does not constitute any recommendation or advice; it has been prepared without taking into account your personal objectives, financial situation or needs and you should consider its appropriateness with regard to these factors before acting on it. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. You should also consider obtaining personalised advice from a professional financial adviser before making any financial decisions in relation to the matters discussed hereto.